TAUFKIRCHEN/MUNICH (dpa-AFX) - The defense electronics group Hensoldt wants to take over the defense specialist ESG from Munich. The deal will be worth up to 730 million euros, as the company announced in Taufkirchen on Tuesday evening. The transaction values ESG at 675 million euros plus a possible additional 55 million euros. The purchase of the system integrator for defense and security is to be financed with a capital increase of up to ten percent and debt of around 450 million euros. The Hensoldt share, which is listed on the MDax, lost almost two percent around midday on Wednesday.

In an initial reaction, analyst David Perry from US bank JPMorgan wrote that Hensoldt expects the takeover to make a moderate contribution to earnings in 2026, which will then increase until 2028. The absence of major shareholder Leonardo from the capital increase associated with the purchase could signal that the Italians did not want to hold on to their Hensoldt stake in the long term. This would be positive for Hensoldt due to the higher free float, according to the industry expert.

The Hensoldt Management Board wants to take on debt totaling 450 million euros to finance the takeover. ESG is currently owned by the investment company Armira.

Hensoldt expects annual cost savings of around 19 million euros, and there should also be potential for more turnover through complementary sales. "The acquisition of ESG fits perfectly into our overall strategy and accelerates the development of Hensoldt," said Group CEO Thomas Müller according to the press release. He believes this puts his company in an "excellent position" for future challenges.

For the current year, the managers expect ESG to generate sales of around 330 million euros. In the coming years, revenue is expected to increase annually in the low double-digit percentage range. Earnings before interest, taxes, depreciation and amortization (EBITDA) should account for around 14 percent of the targeted turnover this year.

Hensoldt hopes that the deal will be completed by the end of the first half of 2024 at the latest. The federal government and major shareholder Leonardo are supporting the project, it was reported. Germany holds a good quarter of Hensoldt's shares via Kreditanstalt für Wiederaufbau.

The authorities still have to give their approval./ngu/bek/nas/tav/mis